McAllen, TX Business Electricity
ElectricChoice Energy Research · Updated
- McAllen is on the AEP Texas grid, with lower delivery than Dallas or Houston.
- Most McAllen businesses end up paying 11–13¢ per kWh all-in.
- Rates drop with volume. Shopping providers gets you a better deal.
Cooling Costs More Here Than Anywhere in Texas
Cooling degree days are the standard measure of how much air conditioning a location needs. McAllen leads Texas by a wide margin. That one fact explains most of the difference between a McAllen electricity bill and a Dallas electricity bill, even though the per-unit rates are similar.
| 3,800 | McAllen annual CDD | Base 65°F. The highest of any major Texas city. Air conditioning runs ten to eleven months a year. |
| 2,950 | Houston annual CDD | Similar humidity, shorter season. Houston’s cooling load is large but stops earlier in the fall. |
| 2,600 | Dallas annual CDD | Hot summers but a real winter. A Dallas business gets months of relief that McAllen does not. |
| 46% | More cooling load than Dallas | That percentage translates directly into higher kWh usage per square foot, which drives the bill. |
What AEP Texas Charges to Deliver Your Power
McAllen is in the AEP Texas Central service territory. The delivery charges are the same as Corpus Christi, Harlingen, Brownsville and the rest of the former Central Power and Light footprint. They are set by the state and do not change with your provider.
AEP Texas Central delivery in the Rio Grande Valley
Effective
| Account size | Fixed monthly | Per kWh | Per kW of demand |
|---|---|---|---|
| 10 kW and under Most McAllen retail and restaurants |
$5.66 | 4.5181¢ | None |
| Above 10 kW Cold storage, large retail, clinics |
$22.00 | 0.0743¢ | $8.57 + $6.25 (4CP) |
The per-kWh delivery charge is noticeably lower than North Texas (4.5181¢ here versus 5.1227¢ on Oncor). But the demand charges above 10 kW are higher, and there is a storm restoration surcharge of 0.1943¢ per kWh already folded into the small-commercial figure. See Corpus Christi business electricity for more detail on how the AEP rate structure works.
Actual Costs by Type of McAllen Business
These are modeled bills using AEP Texas delivery and a competitive energy rate. The usage figures reflect the Valley’s long cooling season, which pushes kWh higher than a similarly sized business in a cooler city.
Estimated summer bills
AEP delivery + energy rate of 6.40¢
| Business | kWh/mo | Est. bill | All-in rate |
|---|---|---|---|
| Small retail on 10th Street | 3,400 | $404 | 11.88¢ |
| Dental clinic on Nolana | 6,200 | $683 | 11.01¢ |
| Restaurant near La Plaza Mall | 11,000 | $1,207 | 10.97¢ |
| Customs brokerage office | 4,800 | $530 | 11.04¢ |
| Produce cold storage, west McAllen | 85,000 | $8,734 | 10.27¢ |
| Distribution warehouse off Expressway 83 | 42,000 | $4,381 | 10.43¢ |
The cold storage facility uses twenty-five times as much power as the retail shop but pays a lower rate per kWh. Flat, continuous loads get the best pricing in any market, and in the Valley they also get the least penalty from the AEP ratchet, because there is barely an off-season to ratchet against.
Cold Storage and Produce Operations
The McAllen area handles a significant share of the produce entering the United States from Mexico. That produce needs to be cooled immediately and kept cold until it moves. The result is a cluster of high-usage, high-load-factor commercial accounts that are unlike anything else in the Valley.
The load never stops
Cold storage compressors run 24 hours a day, 365 days a year. The load factor on these accounts routinely exceeds 80 percent, which is better than most industrial loads in the state. Suppliers love this profile and price it accordingly.
Primary voltage saves real money
If a cold storage facility is large enough to take delivery at primary voltage, it bypasses part of the AEP distribution system and pays a lower demand charge per kW. Many Valley cold storage operations qualify but have not made the switch. The rate class change alone can reduce the delivery portion substantially.
Sales tax exemption applies
Electricity used predominantly for processing or manufacturing qualifies for the Texas sales tax exemption. Cold storage of produce being prepared for resale can qualify depending on the operations involved. It is worth the engineering study at this volume.
The demand ratchet barely matters for cold storage
Because the load is flat year-round, the ratchet floor is almost the same as actual demand in any given month. This is one of the few business types in the Valley where the AEP demand structure works in your favor compared to what you would pay on a pure volumetric rate. A flat load on demand metering is efficient. A spiky load on demand metering is expensive. Know which one you are.
Managing the Bill When the AC Runs All Year
You cannot turn off the cooling in McAllen. But you can make every hour of compressor runtime produce more cooling per kWh. In a city with this many cooling degree days, efficiency investments pay back faster than almost anywhere else in the country.
Right-size the equipment
An oversized rooftop unit short-cycles, running hard in bursts rather than long and steady. It never dehumidifies properly, it wears out faster, and it creates demand spikes. In McAllen, where the cooling load is nearly constant, a properly sized unit running longer at a lower draw uses less electricity and costs less to maintain.
Clean condenser coils more often than the manual says
McAllen air carries dust from agriculture and construction plus salt-adjacent moisture. Coils foul faster than in an arid climate. A fouled coil raises the compressor’s peak draw, which raises your demand, which the ratchet carries forward. A quarterly cleaning schedule instead of annual can pay for itself within a billing cycle.
Seal the building before you shop the rate
A McAllen building with poor weather-sealing around loading docks, entrances or a flat roof is dumping conditioned air outside and pulling unconditioned air in. In a 100-degree, humid environment, every gap is money. Fix the envelope first. Then the rate improvement on top of lower usage compounds.
Pre-cool to avoid afternoon demand spikes
Drop the building temperature a degree or two in the late morning while the outdoor temperature is still manageable. Then hold steady through the 3 to 6 p.m. peak. The building thermal mass carries it, and your meter sees a lower peak. On demand-metered accounts this directly lowers the demand charge.
Related: Corpus Christi business electricity covers humidity’s impact on commercial HVAC load. Fort Worth business electricity goes deeper on load factor and how suppliers price it.
Questions From Valley Business Owners
Who delivers electricity in McAllen?
AEP Texas, specifically the former Central Power and Light territory now called AEP Texas Central. AEP owns the lines, meters and substations. It does not sell electricity. You choose a retail provider for the energy supply. For outages call AEP Texas at 1-866-223-8508.
Why is my McAllen electricity bill higher than a similar business in Dallas?
Almost always cooling. McAllen averages roughly 3,800 cooling degree days a year versus about 2,600 in Dallas. That means your air conditioning runs harder and longer, which drives up usage and peak demand. The delivery rate per kWh is actually lower than Dallas (4.5181 cents versus 5.1227 cents), but the extra kilowatt-hours more than make up for it.
Is McAllen deregulated?
Yes. McAllen is in the AEP Texas Central service territory, which is deregulated. You can choose your retail electric provider and shop for a competitive rate. Some neighboring communities in the Valley are served by Magic Valley Electric Cooperative, which is not deregulated. Check which utility name appears on your bill.
How much does commercial electricity cost in McAllen?
AEP delivery is 4.5181 cents per kWh plus $5.66 a month for accounts under 10 kW. Energy rates in the AEP South zone are running 5.75 to 7.20 cents in October 2026. A typical McAllen small business lands around 11 to 13 cents all-in, somewhat higher than North Texas mainly because of higher usage from cooling.
What does the 80 percent ratchet mean for my McAllen bill?
For demand-metered accounts above 10 kW, AEP Texas sets your billing demand each month as the higher of your actual peak or 80 percent of your highest peak in the previous eleven months. In McAllen, where the cooling season runs most of the year, the ratchet bites less than in a city with a distinct off-season, because your winter demand does not drop as far. Still, a spike from a failed compressor in July can set a floor you pay through the following May.
Can a produce cold storage facility get a better rate?
Usually. Cold storage runs a flat, continuous load, which is the profile suppliers price best. The load factor is excellent, the usage is high, and the pattern is predictable. Those three things together qualify for the best energy rates available. If your cold storage is on a standard small commercial rate, it is almost certainly not getting the pricing it should.
Does the border location affect electricity costs?
Indirectly. McAllen sits at the southern end of the ERCOT grid, and transmission congestion between the Valley and the rest of the system can occasionally push local wholesale prices higher than the North zone. This is priced into contracts for the AEP South zone, which is why energy rates here tend to be a few tenths of a cent above Dallas. It is not dramatic, but it is real.
AEP Texas delivery charges from the PUCT monthly TDU rate report effective September 1, 2026. Cooling degree day figures are approximate long-term normals (base 65°F) from NOAA climate data. Energy rates reflect competitive offers in the AEP South load zone during October 2026. For the statewide picture: Texas commercial electricity.
